This article first appeared in The Edge Malaysia Weekly on August 10, 2020 - August 16, 2020

Joining the market rally, shares in Oversea Enterprise Bhd (OEB) got a shot in the arm last Friday, following a mandatory takeover offer from Anzo Holdings Bhd managing director and substantial shareholder Datuk Chai Woon Chet. It was triggered after he bought a 62.37% stake and emerged as the Chinese restaurant company’s largest shareholder.

The exercise comes at a time when surging trading volume is seen across the market, especially among small- and medium-cap stocks. And OEB’s share price hit limit up at 61.5 sen, a 100% gain from the offer price of 30 sen a share. This means that in just a day, Chai’s net worth in the company has already doubled.

Chai is no stranger to the local corporate scene, with his entry into several companies in the past hogging the limelight, including XOX Bhd, Astral Supreme Bhd, Vizione Holdings Bhd and M3 Technologies (Asia) Bhd. He is the son of Sabah timber tycoon Tan Sri Chai Kin Kong. It will be interesting to see what made Chai jump onto the F&B bandwagon and his plan for OEB.

Of course, the critical question is how OEB will cope with the challenging business environment in the new normal after taking a hit because of Covid-19.

The Chinese restaurant chain has been making losses since its financial year ended March 31, 2018 (FY2018), with a widened net loss of RM5.46 million for FY2020. In the past year, its share price has been relatively stagnant, ranging between nine sen and 33 sen, compared with its listing price of 23 sen in April 2010.

As the market is getting overheated, any corporate exercise could easily drive up share prices. Retail investors should make informed decisions and view the market rally rationally.

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